Thin Skin

The coroner was ready to address the press. She stood behind the podium with its bank of microphones, looked directly into the cameras, and delivered her judgement.  “The cause of death was thin skin.”  Several reporters nodded in agreement.  They had been predicting this would be the answer.  But one journalist refused to close his notebook and felt compelled to get a clarification.  “Pardon me, Madame Coroner, but you are saying that the deceased perished from thin skin?”  “Yes”, she replied without even a hint of emotion.  “So the 27 stab wounds had nothing to do with his death?”  “Well”, the coroner replied, “if he had had stronger skin he’d still be with us today, wouldn’t he?”

There was a rumor in 1897 that Mark Twain had died. A newspaper printed an obituary.  Twain’s response was “The reports of my death are greatly exaggerated”.  I was thinking of this earlier today as President Trump was again telling the American public that Obamacare is imploding.  It is true that our current health insurance system seems to be having difficulty breathing, but the first step might be to convince Trump to stop choking it.

Yesterday’s big news was Anthem Blue Cross and Blue Shield’s announcement to abandon the exchange market in Ohio for 2018. This was not a shock to those of us following the shenanigans in Washington.  This business decision by Anthem will be spun more than a dreidel during Hanukkah, but their simple words tell the real story:

Anthem has a long history of serving individuals in our communities. Customers have grown to expect great value and access to health care coverage from us.  And our desire to meet those needs has not changed.  But the current regulatory climate and the uncertainty it has produced in our industry do not give us the clarity and confidence we need to commit to offering broad-based, affordable health plans for 2018.  So, while we wait for new regulations to be released, we’ve made the difficult decision to reduce the number of Individual health plans we’ll offer next year.

Please note that Anthem isn’t crying poverty. There are no claims of insurmountable losses.  Washington seems determined to play politics with Anthem’s clients and gamble with Anthem’s money.  Anthem walked.  My clients have been calling all day, mostly elderly, Medicare beneficiaries who aren’t impacted, to ask what they need to do.  The answer today is – NOTHING.  We may need to take action in November, but there is absolutely nothing to do today.

There have been members of Congress and various Republican state officeholders who have been attempting to kill the Patient Protection and Affordable Care Act (Obamacare) since its inception.  There were the 60+ votes in the House that we’ve discussed ad nauseum.  There have been various law suits from red states.  Some of the suits have been more effective than others.  We don’t have Medicaid expansion in all 50 states, thus blocking millions of Americans from access to healthcare.  Other cases involve subsidies, who gets them and how much.

CWRU Professor J. B. Silvers, the former CEO of QualChoice, published an article on January 4^th of this year on MarketWatch about the dangers of repealing Obamacare without a comprehensive plan.  He returns again and again to market uncertainty.  The insurers have to trust the government to not change the rules in the middle of the game.  AND THEY CAN’T.

One example he (and others) cited was an initial risk reduction program built into Obamacare to defray the high cost of claims anticipated during the first three years of the program. The claims were significantly higher than anticipated, “But when the time came to pay for the risk reduction in the Obamacare exchanges, Congress reneged and paid only 12% of what was owed to the insurers.” This shortfall chased some insurers out of the market and forced those remaining to raise rates significantly last year.

And now we are in the middle of another bait and switch.

One of the lawsuits the Obama administration had been fighting was designed to eliminate a special subsidy for those Americans earning between 138% and 250% of the federal poverty level. This additional benefit not only helped to make the premium affordable, it also reduced the deductibles and out of pocket limits for these insureds.  The Obama administration had won a stay while the fight went on in the courts.  Trump could simply drop the fight.  He has been threatening to do this for months.  The insurers would be left holding the bag.  This is a link to an April Forbes article on the issue.  Katherine Hempstead of the Robert Wood Johnson Foundation is quoted in the article.  “It probably was inevitable that the threat of cost-sharing reduction non-payment would be dangled for leverage.”

What we learn, time and again, isn’t that Obamacare is imploding. It is being sabotaged.  It is under attack.  And if the way we deliver and pay for healthcare, nearly 20% of our economy, suffers an untimely demise it won’t be from thin skin.  I think we have to see who is holding the knife.

DAVE

www.cunixinsurance.com